DivcoWest has just made its first foray into the Washington, D.C.-area apartment market, an investment that may turn out to be prescient.
The San Francisco-based real estate company paid $94.2 million, or about $240,000 per unit, for Adara Herndon in Herndon, Virginia - a deal completed days after nearby Crystal City in Arlington, Virginia, was disclosed as a front runner in the sweepstakes for Amazon's second headquarters, dubbed HQ2.
DivcoWest prefers so-called “innovation” markets where technology companies and other creative firms flourish. That is a fitting description for the Washington-area tech market, which may get a big boost if the rumors are true that Amazon will make Northern Virginia home – or one of the homes – for their second headquarters. The latest speculation on the much anticipated HQ2 project has the company splitting the project between Northern Virginia and Long Island City in Queens, New York. The project is expected to create 50,000 jobs in the coming years and pump billions into the local economy – or economies.
Those new jobs are likely to create a good deal of added demand for apartment rentals, driving up the values of those properties for owners.
The 392-unit Adara Herndon, located at 2399 Glen Echo Dr., was developed in 2000 and is nearly fully-occupied, according to CoStar research. Formerly known as Avalon Herndon, the mid-rise community located 15 miles west of downtown Washington features a mix of one- to three-bedroom apartments, with washers and dryers, central air conditioning and fireplaces in some units. The property’s amenities include a pool, a fitness center, on-site maintenance and a playground.
DivcoWest teamed up with Arlington’s Blackfin Real Estate Investors on the deal, with Blackfin set to manage the property moving forward. The seller was a partnership between Equity Residential and AvalonBay Communities.
The deal coincides with the opening of DivcoWest's new Washington office at 1620 L St. NW. The firm, which also has offices in San Francisco, Boston, New York and Los Angeles, typically invests in office properties and looks to increase the value of properties through renovations.
“This new office demonstrates our commitment to the Washington, D.C. market, which we believe to be one of the most attractive growth markets for the innovation economy,” said DivcoWest’s Chief Executive Officer, Stuart Shiff. Managing Director Ryan Friend has been selected to head up the new office.
DivcoWest has invested in four Washington office properties since March, 2017. The company is expected to keep shopping for both office and apartment properties in the market.
